I learned lots of valuable information in high school, but one subject that wasn't on the curriculum was personal financial management. We didn't learn how to balance a checkbook, why budgeting is important or how credit card interest works, among other life lessons.
Fast forward a couple of decades and technological advances have resulted in an exponential increase in financial products available to consumers, making financial decision-making all the more difficult; yet financial literacy courses are mandatory for high school graduation in only four states.
This was one of many issues tackled at the fifth annual Financial Literacy and Education Summit, hosted by the Federal Reserve Bank of Chicago and Visa Inc., on April 4, 2011. Leading experts, including key members of President Obama's Advisory Council on Financial Capability (ACFC), also discussed:
- Government's role in improving global financial literacy.
- How can financial literacy levels be improved in the current economy?
- How can government, the private sector and educators implement an effective, coordinated strategy for reaching consumers and equipping them with the necessary tools and resources to make wise financial decisions?
Panelists shared insights, success stories and personal examples gleaned from their endeavors in advancing financial literacy. Here's a brief sampling:
- The Financial Literacy and Education Commission, a consortium of 22 federal government agencies and bureaus, has developed the framework for an overarching financial literacy strategy, establishing concrete goals for public and private sectors.
- Parents should look for teachable moments. When kids clamor for a new Nintendo, use it as a springboard to discuss the relationship between money and time.
- Financial education is a continuous process, from children's allowances to retirement decisions, but age-appropriate timing is the key: Yes, you can teach teenagers how mortgages work, but they're much more interested in learning how to buy a car.
- Make it fun. Research by the University of Florida, among others, has shown that students who played educational video games like Visa's Financial Football scored better on benchmark exams those who did not.
- There's a huge opportunity for teachable moments in the workplace. Research shows that 70 percent of employees would like to have financial education provided by their employer. The ACFC currently is exploring ways to engage corporations in this effort.
- Many teachers feel they don't have the skills, background or classroom time to adequately teach financial literacy, yet 89 percent of teachers surveyed (and 85 percent of parents), feel that it's important to have financial education programs in the schools, whether it's part of the formal curriculum, after-school programs, games, etc.
- Encourage local schools to offer relevant financial curriculum that will prepare students for financial challenges they'll face as adults. One panelist noted, "I took years of French in high school and college but I've only been to France three times in 30 years. I didn't take a single course teaching me anything about the stock market or compound interest or investing."
- Panelists urged employers to create meaningful part-time jobs for high school students so that they can begin to equate how long they have to work to pay for things. Research has shown that kids who have jobs are much more likely to be high savers.
To watch a free webcast of the 2011 Financial Literacy and Education Summit, go to www.practicalmoneyskills.com/summit2011.